“Allowing the market to wash its hands of serving lower income people would be detrimental to the economic well-being of communities. If the government becomes the sole provider of housing finance to lower income communities, we will have created a dual marketplace. Separate is not equal, and I fear that this will beckon the return of redlining and discrimination by private financial institutions.
“As with any major plan, the devil is in the details. The plan contains some measures that would target the government’s involvement in the mortgage market, cutting out effective subsidies for wealthier individuals by limiting loan sizes, targeting guarantees and other incentives. But we need to see more explicit mechanisms to ensure that the private market has a duty to ensure that creditworthy working and blue-collar people have access to capital, otherwise this plan is not viable.
“The plan presents a range of options; all will have a major impact on the system of housing finance as we know it. Options #1 and #2 would dramatically reduce credit availability for working families. Option #3 shows promise, but the impact on working class communities will be determined by what range of mortgage securities receive a guarantee backed by the government.
“If Congress and the Administration successfully tailor the guarantee to mortgage securities that meet the capital needs of low- and moderate-income and rural communities, then that would keep the private sector in the business of ensuring access to capital in these communities.
“There is universal agreement with the principle that people who cannot afford homeownership shouldn’t be put in an unsustainable loan. However, the Administration’s proposal may be overly narrowing the window of opportunity for many blue collar and low- and moderate-income people from realizing their dream of homeownership. We appreciate the Administration’s efforts to address the critical need for expanded affordable rental housing.